For fresh exploration efforts — in both conventional and unconventional hydrocarbons — the emerging policy and regulatory environment is conducive. However, Team Modi needs to walk an extra mile to reduce regulatory hurdles for existing operators under production sharing contracts A hike in the price of crude oil (courtesy, the US’s decision to reimpose sanctions against Iran and output decline in Venezuela) has drawn the attention to India’s dependence on oil import, which currently stands at 83 per cent, to meet its energy requirement. This, due to a lack of a conducive policy and regulatory environment that came in the way of boosting domestic exploration and production efforts so far. Until the late 1990s, exploration and production of oil and gas used...
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Walmart’s backdoor entry into Indian retail
Walmart, the $500 billion retail giant, has acquired 77% stake in Flipkart, a leading Indian brand in e-commerce segment, with an investment of $16 billion. The balance 23% will be with minority investors, including Alphabet (a subsidiary of global internet giant Google) which will invest $1.5 billion. Walmart is not new to the Indian market. It came to India initially in 2007 in the “wholesale cash and carry” business viz sale to wholesalers and other bulk buyers (including institutional agencies) under a joint venture (JV) arrangement with Bharti Retail. This was under the then FDI (foreign direct investment) policy which allowed foreign investor 51% stake in this business. In 2012, the then UPA-II government liberalised the policy to allow 100%...
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HAS GOVERNMENT RUN OUT OF OPTIONS?
GST Council — the all powerful body that considers changes in the tax structure/rate — should consider inclusion of oil and gas products in the GST, putting them under the 18 per cent slab with the aim of eventually shifting them to the 12 per cent slab Some time back, three public sector undertakings (PSU) in the downstream oil segment viz Indian Oil Corporation (IOCL), Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) were reportedly directed not to hike the price of petrol and diesel by one rupee a litre each that had become necessary due to an increase in the international price of these products. The prices of these products were decontrolled (petrol in June 2010...
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Farm price, market assurance will bloat fiscal deficit
Stung by depressed price-realisation by farmers, much below the minimum support price (MSP), and with impending general elections next year, the Narendra Modi government announced in the Union Budget for 2018-19 that henceforth, they will be assured MSP which is at least 1.5 times the cost of production. Mere assurance of a remunerative price is of no use unless the farmer is able to sell his entire produce at this price. Keen to ensure that this happens, the government asked NITI Aayog to come up with suggestions. The latter prescribed three alternatives, namely: market assurance scheme (MAS) or price deficiency payments or incentives to private sector to buy farmers’ produce at MSP. Under MAS, agencies of the state buy the...
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FLEDGLING FERTILISER REFORMS
Successive Governments have lamented an increase in fertiliser subsidy and its destabilising effect on the fiscal situation. Yet, they have failed to address the real issue The price of domestic gas has been increased from the existing $ 2.89 per million British thermal unit (mmBtu) on net calorific value basis to $3.06 per mmBtu for a six-month period beginning April 1. The hike, taking the price back to the level reached two years ago, has brought to the fore some niggling questions which successive ruling dispensations have dodged for several decades. First, who pays for the extra price that user industries — mainly fertilisers (besides power, CNG and PNG) — shell out? The urea industry alone requires over 45 million standard cubic...
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Govt’s fertiliser DBT neither direct nor full benefit
The Cabinet has approved direct benefit transfer (DBT) of fertiliser subsidy. However, the subsidy will continue to be routed through fertiliser manufacturers. They will receive 100% of the subsidy amount after fertiliser is delivered to the farmer and his identity, namely Aadhaar (and other details such as plot size, crop, nutrient use), is captured on the electronic point of sale (e-PoS) machine. At present, manufacturers sell urea at the maximum retail price (MRP), which is controlled by the Union government at a low level, and get subsidy reimbursement on unit-specific basis under the new pricing scheme (NPS). On the other hand, manufacturers of non-urea fertilisers are theoretically given ‘uniform’ subsidy (on per nutrient basis) under the nutrient-based scheme (NBS). However,...
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ANOTHER EMPTY PROMISE TO FARMERS?
The Government’s commitment to ensure a MSP for crops that is equal to 1.5 times the cost of production is much ado about nothing. Interests of farmers are well protected under the existing mechanism of fixing MSP. The need is to focus on ensuring that they get it on ground zero In its 2014 poll manifesto, the Bharatiya Janata Party had promised to guarantee farmers a price equal to 1.5 times the cost of production. However, the promise came too late, when Union Finance Minister Arun Jaitely made the announcement in the Budget speech for 2018-19. Later, replying to a debate in Parliament, Jaitely clarified that the production cost would be taken as actual paid out cost plus imputed value of family...
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Fiscal roadmap abandoned midstream
In his budget speech for 2016-17, finance minister, Arun Jaitley had announced the government’s intent to review Fiscal Responsibility and Budget Management (FRBM) Act with a view to make the target flexible to make it range bound instead of a fixed number as had been the position hitherto under the extant Act in vogue since 2003. Accordingly, a committee under NK Singh was set up to examine this issue besides revamping of the Act. The committee recommended a fiscal deficit target of 2.5% of gross domestic product (GDP), revenue deficit of 0.8%, a combined centre-state debt ceiling of 60% and a central debt ceiling of 40% by fiscal 2022-23, under a six-year medium-term fiscal roadmap. It also recommended a fiscal...
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PUBLIC STOCKHOLDING IS A PRIORITY ISSUE
India’s current aggregate measurement support must not lull us into a state of complacency as the scenario may change, putting us in a vulnerable zone. Hence, the focus has to be on changing the rules of the game to make them fair and equitable The 11th World Trade Organisation (WTO) ministerial held in Buenos Aires during December 10-13, 2017 failed to produce even a declaration — a bare minimum for any such conference. The reason for the failure was diametrically opposite stance taken by the US and India. While the latter pressed for finding a permanent solution for public stockholding programmes for food security — the most contentious issue under the Doha Development Round (DDR) — the former did not even allow...
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GST Council should drop idea of 1% tax on online sales
The decision of the GST Council, the all-powerful body to decide the tax architecture and rates on various items, to require e-commerce companies to levy 1% tax on all transactions made on their platforms has led to widespread consternation. So much so, it was forced to defer its implementation indefinitely. But the idea is not new. Even under the erstwhile state sales tax/VAT (value-added tax) dispensation, the Karnataka commercial taxes department had directed e-commerce companies to deduct 1% of the money payable to the merchant towards tax and remit the same to the department. The merchant/dealer, in turn, could claim credit or refund on this amount while discharging his liabilities. The move was triggered by tens of thousands of dealers...
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